Philips says reached deal ‘in principle’ with US over sleep machine recall
Millions of devices were recalled over concerns that users could inhale particles of noise-cancelling foam, which could potentially cause cancer.
Dutch medical technology company Philips announced on Tuesday it had reached a deal "in principle" with US authorities to settle a lengthy case regarding defective sleep apnoea machines. Philips set aside $322 million in the third quarter of 2023 to cover the anticipated settlement costs, with payment expected in the first quarter of 2027.
The recall of DreamStation devices, used to treat sleep apnoea, stems from concerns over potential health risks associated with the recall, including the inhalation of noise-cancelling foam fragments and possible cancer. The settlement agreement is pending final review of necessary paperwork, according to Philips. The provision negatively impacted the company's Q3 earnings, which fell to €28 million compared to €187 million in the same period last year.
CEO Roy Jakobs stated the deal represented a significant step forward in resolving the related legal proceedings. Philips' stock initially rose by around six percent following the announcement. The company's focus has shifted towards AI-driven medical technologies following a series of setbacks with the sleep apnoea recall. Despite the challenges, Philips remains optimistic, projecting a 3% to 4.5% sales growth for the full year and highlighting strong customer response to their latest AI innovations.
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